Wells Fargo must now get permission before handing out 'golden parachutes'

By Renae Merle, Washington Post

November 22, 2016

Photo: Alexander Soule, Business Reporter

Wells Fargo will be required to get approval for changes in directors and senior executive officers.

Wells Fargo will be required to get approval for changes in...

NEW YORK - Federal regulators are moving to make it more difficult for Wells Fargo to make executive changes or give departing executives departure packages known as "golden parachutes," the latest signal that the San Francisco bank will be grappling with the fallout from a sales scandal for months to come.

The move by the Office of the Comptroller of the Currency caught Wells Fargo executives by surprise. It comes after the bank had already reached a $184 million settlement in September with regulators, including the OCC, after acknowledging that it had fired thousands of employees for opening checking accounts and credit cards customers didn't ask for in order to meet sales goals.

Such so-called enforcement actions can trigger new restrictions on a bank's operations. But the OCC has typically waived those restrictions, and it did so again when it initially reached a settlement with Wells Fargo.

In a brief notice late Friday, the OCC said it has now changed its mind.

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The agency "informed the Bank today that it has revoked provisions of the enforcement documents that provided relief from specific requirements and limitations regarding rules, policies, and procedures for corporate activities," the OCC said in a statement.

As a result, Wells Fargo will be required to get agency approval for changes in directors and senior executive officers, and for any golden parachute payments, the OCC said.

An OCC spokesman declined to comment on why the agency rescinded its decision to waive the restrictions. Its action comes as the bank and regulators continue to face criticism from angry lawmakers.

Wells Fargo, which saw customers opened 44 percent fewer accounts last month, said it would cooperate with its regulators.

The surprise election of President-elect Donald Trump, who has promised to dismantle some key banking industry regulations, had raised the prospect that the company's troubles would fade as regulators and lawmakers turned their attention to preparing for the new administration's priorities.

That now appears less likely.

"Though the agency didn't give a reason for the unexpected measure, it's an indication that the OCC and other financial regulators don't intend to slide into lame-duck mode," said Ian Katz, director at the policy analysis group Capital Alpha.

"Despite the mood of optimism that Trump will be able to overhaul regulations and regulators, the OCC move underscores the fact that those changes can take a long time."